20. MUL TI- YEAR FUNDING PROCEDURES

A. General This chapter prescribes policies for incrementally funding multi-yearawards when full funding of the complete project period is not available at the beginningof the project period. Multi-year funding allows Federal funds for a multi-year award tobe provided in increments or by allotment, usually on an annual basis.

B. Multi-Year Awards Multi-year awards are awards which have a project periodof more than 12 months of activity. Multi-year awards are partially funded when theawards are approved, and are subsequently funded in increments. The Departmentencourages long-range program planning for the award and administration of financialassistance actions. One mechanism for facilitating this goal is funding through multi­year awards. This particularly pertains to awards that support research projects that mayspan several years. One of the purposes of multi-year awards is to reduce theadministrative burden on both the applicant and the operating unit. For example, withproper planning, one application can suffice for the entire multi-year award period. It isthe Department's policy that the period of activity of multi-year awards should notexceed five years. Grants Officers should establish additional internal policies forconsistent selection and approval of programs and awards that may be funded under thesemulti-year funding procedures.

C. Multi-Year Funding Principles.

1. Reliability and Predictability Multi-year funding may be considered forprograms or long-term awards where funding for the subsequent year(s) is anticipated butnot provided at the time the award is approved and where the estimated budget for futurefunding periods can be forecast with some degree of reliability. These procedures shouldnot be used for programs or long-term awards where the funding allocation maysubstantially change (either increase or decrease) from initial projections. Multi-yearfunding is provided by adding allotments of funds, usually on an annual basis, to extendthe funding period within the previously approved project period.

2. Competition Recipients of multi-year awards should be selected after full andopen competition. However, projects under multi-year funding awards do not re-competeeach year even though the awards may be funded annually. At the outset the GrantsOfficer would approve the award for a project period of more than one year (typicallythree to five years), and continuation amendments to add funding and extend the fundingperiod (or add funding periods if time limited funds) are later approved with lessadministrative processing by the recipient, the Program Office, and the Grants Office.This feature - competing only once for a multi-year period of support - permits thegrantee and the operating unit to more reliably plan for future years. The nature ofallotting the funding on an annual basis preserves the ability of the operating unit todiscontinue support at points during the project period if the government's interestrequires it.

3. Request for Applications Program Offices must clearly identify in their FederalFunding Opportunity (FFO) announcements when multi-year funding is available underthe program. The Federal Register notice and FFO must clearly state that funding foreach year's activity is contingent upon the availability of funds from Congress,satisfactory performance, and is at the sole discretion of the agency. The notice and FFOshould solicit applications covering the entire multi-year period and must identify the

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amount currently available as well as the amounts projected~ to be available in the future.Instructions for applying for a multi-year award must be contained in the notice.

4. Exceptions Not all programs or awards are good candidates for multi-yearfunding. Grants Officers must exercise good judgment in determining when to approvemulti-year awards. Multi-year funding is not appropriate and a fully funded award mustbe used in the following circumstances:

a.. The project is exclusively for construction, alterations or renovations, oracquisition of property;

b. At the time of award, the total period of DOC support for the project is planned tobe less than 24 months.

S. Duration of Awards The initial funding period and subsequent continuationamendments extending the funding period should usually be for 12 months but the initialfunding period may vary from 12 months in order to provide for the continuation of thefunding period at an advantageous date, such as the end of the grantee's fiscal year or tocoincide with phases of the project contained in the proposal and budget. Since there isonly one continuous funding period for an award made with no-year appropriations, theapplicant has more flexibility in carrying over funds throughout the entire project period.

6. Amendments The commitment to obligate the amount of available funding forthe next funding period with continuation amendments shall be clearly conditioned uponthe availability of funds, satisfactory progress by the grantee, and the Program Office'sdetermination that continued funding is in the best interest of the government.

a. An amendment to obligate prospective funding available shall be made on FormCD-451, "Amendment to Financial Assistance Award," prior to the expiration of eachfunding period. The Grants Officer shall execute the amendment after recommendationby the Program Officer that the performance under the current funding period issatisfactory and funds are available. The Program Officer should submit to the GrantsOfficer any continuation application with budget revisions, if applicable. A documentedrecommendation, and certification of funding availability at least 30 days prior to theexpiration of the funding period should also be submitted.

b. The recipient should submit an amended application to the Program Officer forreview and recommendation to the Grants Officer for approval before the end of thecurrent funding period if the upcoming funding period will have a change in the scope ofwork or an increase in the funding level from that which was last approved. Otherwise,there is generally no requirement for the recipient to submit subsequent full applicationsunder a multi-year project period.

c. Unobligated balances will automatically be carried over upon the continuation ofthe funding period. For unobligated balances, the SF-269, "Financial Status Report," willbe used as the basis for determining if there is any unobligated balance to be carried overat the end of the current funding period.

d. It is important to distinguish clearly between (1) stopping support of a project bynot continuing the funding period with continuation amendments, and (2) termination ofa grant. A grant gives the recipient legal authority to obligate the funds awarded. Thegovernment may unilaterally terminate a grant only if the grantee has materially violatedthe grant's terms. The Department must give recipients due process prior to terminating a

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grant for violation of its terms. Except where required by statute, recipients have no rightto a formal appeal process when a continuation is denied. This is because neither theapproval nor extension of a funding period, project period, or the award of a grant givesthe recipient any legal entitlement to receive additional awards. Awards with multi-yearfunding will generally be funded in allotments adding to or continuing the fundingperiod. The new award document (Form CD-450) initially obligates only the firstallotment of funds. Within 30 days of the end of each funding period, the ProgramOfficer will determine whether to recommend to the Grants Officer a continuationamendment, which adds funds to the award and continues the funding period.

D. Preparation of New Award Following are instructions for the preparation ofForm CD-450, "Financial Assistance Award," and Special Award Conditions for awardswith multi-year funding.

1. The CD-450. "Financial Assistance Award," for a multi-year award shall beprepared as reflected in the guidelines and procedures and described below:

a. The total amount of funding shown in the upper right -hand corner of the FormCD-450 should reflect the amount, both Federal and non-Federal that is currentlyavailable for obligation. For example, a multi-year award with a total three (3) yearbudget of $3,900,000 (three equal annual increments of $1,000,000 as the Federal shareof cost and $300,000 as the recipient share of cost) will show the portion of Federalfunding that is currently available for obligation ($1,000,000) and at least thecorresponding portion of the non-Federal amount.

b. The project period should reflect the entire multi-year period during whichFederal sponsorship begins and ends.

c. In order to make it clear that future support is anticipated, the following shall beincluded in the special award conditions:

(1) The project period and budget(s) incorporated into this award cover a __ -yearperiod for a total amount of $ in Federal funds. However, Federal fundingavailable at this time is limited to $ for this funding period. Receipt ofany prospective funding is contingent upon the availability of funds from Congress,satisfactory performance, continued relevance to program objectives and will be at thesole discretion of the Department of Commerce. The Department of Commerce is notliable for any obligations, expenditures, or commitments which involve any amount inexcess of the Federal amount presently available. The recipient will be responsible forany and all termination costs it may incur should prospective funding not becomeavailable. No legal liability will exist or result on the part of the Federal Government forpayment of any portion of the remaining funds which have not been made available underthe award. Notifications affecting funding or notice of non-availability of additionalfunding for prospective years will be made only by the Grants Officer. The amendmentto obligate prospective funding available shall be made on Form CD-45 1, "Amendmentto Financial Assistance Award," if at all possible prior to the expiration of each year'sactivities.

The project period for this action is through _The funding period for this action is through . [generally firstyear]The funding period for this action may be extended through _

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[NOTE: Funds are available for obligation from the beginning of the award through theend of the funding period. With each year's amendment to add funds, the funding periodis EXTENDED from the date of award, so that by the last year of the award, for example,the 5-year project period equals the 5-year funding period.]

2. An itemized budget must be incorporated into the award which includes theFederal and non-Federal share of funding that is currently available.

E. Preparation of Amendment(s) Following are instructions for the preparation ofamendments for awards with multi-year funding.

1. As prospective funding becomes available for extended funding periods, theGrants Officer shall notify the recipient by using the Form CD-451, "Amendment toFinancial Assistance Award," of the obligation of prospective funding. This should bedone prior to the expiration of the current approved funding period.

2. The Form CD-451, "Amendment to Financial Assistance Award" shall beprepared as follows:

a. The amendment provides $ in Federal funds for the continued fundingof this multi-year award for a total of $ . The amount to be entered into the"Previous Estimated Cost" column should be the aggregate amount that has beenobligated under the award. The amount to be entered into the "Add" column is theamount which is being obligated with this action. In addition, the following terms shallbe included in the special award conditions:

(1) This amendment provides $ in Federal funding for the continuedfunding of this multi-year award for a total of $ . Any commitments,obligations, or expenditures in excess of that amount of Federal funds will be made at therecipient's risk. The funding period for this amendment is extended through (date).Future funding is contingent upon the availability of funds, satisfactory performance onthe current and/or previous award, continued relevance to program objectives, and is atthe sole discretion of the Department of Commerce.

b. Work to be performed with this funding should correspond to that identified in theoriginal application and proposal, with any approved revisions. The original application,proposal, and any approved revisions will be incorporated into the award by reference inthis amendment.

3. If the work to be performed with the prospective funding does not correspond tothat identified in the original application, along with the proposal and any approvedrevisions, the recipient should submit a request for approval of any revisions to the lastapproved budget and work to be performed. This request should be submitted to theProgram Officer for approval by the Grants Officer. It should be noted that any revisionto the work to be performed should not change the basic scope of work originallyapproved. Changes to the approved scope of work must be incorporated into an award bythe Grants Officer in a formal amendment.

4. In the event that funding does not become available or the determination is madenot to provide additional funding for prospective year's activities, the Grants Officer shallnotify the recipient in writing prior to the expiration of the current funding period.

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5. While the Department reserves the right not to provide all or a portion of aprospective year's funding, every effort should be made to minimize changes to theoriginally approved funding levels.

a. If funding levels increase over the amount stipulated in the special awardcondition(s), the recipient must submit a supplemental application for the amount of theincrease along with a new budget and required certifications. [Caution: A significantincrease in funding may lead to an unauthorized change in the scope of work.]

b. If funding levels are significantly decreased, the recipient must submit a requestfor budget revision to the Program Officer. [Caution: A significant decrease in fundingcould lead to an unauthorized change in the scope of work.] The Program Officer willreview the request and make written notification to the Grants Officer who will notify therecipient of the Department's approval or disapproval. If the Grants Officer approves therevised (decreased) budget, the Form CD-451, "Amendment to Financial AssistanceAward," shall be used.

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